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Markets and News!

As we approach weekend, things are looking bit down. US had not made any all time highs and have ended in flat to negative zone. Asia is also mixed. The major factor that is impacting global markets is China’s decision of not buying US bonds. China is a 3 trillion worth market and that could present problem to both US and China. Suddenly demand would fall for US bonds and if not US who will lend money to? US bond yields have already crossed 2.5% compared to interest rates which are below 1.5%. So, its a strange geo political scenario that could push up the US bond yields. India’s old 10 year has crossed 7.44 on rising crude prices. All these are the factors that provides a confusing picture.

On domestics the results season will officially kick off today with IndusInd bank coming up with the Q3 numbers in the afternoon and TCS coming up with its number after the market closes at 5PM. Both are very important as banking and IT are the two most crucial sectors for India. IndusInd bank will be looking for a 23-25% loan growth and for TCS dollar revenue and the number of clients added will be crucial. Apart from that the Long term capital gains tax also could play some spoilsport as investors get worried about the implications. Added to this is the Brent crude still remaining above 69 dollars and nothing great happening anywhere. So, IndusInd is the only news that can add some cheer.

Futures and Options!

On derivatives front, yesterday things changed a bit as many people started taking short positions as NIFTY started going up in the afternoon. That is an early indication that now people are looking at the concept of sell on rally, which was not there till now this year. With 3 weeks left to expiry Nifty’s futures premium is less than 5 rupees and that shows how much bearish is the market. On options front also call shorting is happening at 10600 and 10700 levels and unwinding of positions happened at 10800 and 11000 calls. The probability of Nifty touching 10800 became remote in this series so profit booking and positions closing is happening there. 10800 has a premium of 25 rupees and its a right price to exit. On the put side, unwinding is happening at 10400 and 10300 puts where put sellers are closing their positions and that shows that they are looking at a probability of Nifty breaking 10550 mark. The Nifty put call ratio now stands at 1.35.

What is the NIFTY call for today?

Nifty will open slightly negative around 10620 mark and might break 10600 today. 10550 will be the support that could stop the downside. Now a band of 10550-10650 is formed and Nifty might negotiate in this band for sometime. Today is Bank Nifty weekly expiry and that would increase the volatility. I would suggest opening up of a short position at 10620 level with 10560 as the target. Buying a put also can be an option. Watch out for my tweets. Bank Nifty will react as per the IndusInd bank results and take positions observing the movement of the bank nifty.